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Operation Management Essay

The Bombay Tiffin Box Suppliers Association (TBSA) operates a service to transport home-cooked food from workers’ homes to office locations in downtown Bombay. Workers from residential districts must ride commuter trains some 30–40 km to work. Typically, they are conservative diners, and are also constrained by strong cultural taboos on food handling by caste, which discourage eating out. TBSA arranges for food to be picked up in the morning in a regulation tin ‘tiffin’ box, deposited at the office at lunch time, and returned to the home in the afternoon.

TBSA takes advantage of public transport to carry the tins, usually using otherwise under-utilised capacity on commuter trains in the mid-morning and afternoon. Different colours and markings are used to indicate to the (sometimes illiterate) TBSA workers the process route for each tin. For as long as ships have navigated the seas, ports have had to handle an infinite variety of cargo with widely different contents, sizes and weights, and, whilst in transit or in storage, protect them from weather and pilferage.

Then, the transportation industries, in conjunction with the International Standards Organization (ISO), developed a standard shipping container design. Almost overnight, the problems of security and weather protection were solved. Anyone wanting to ship goods in volume only had to seal them in a container and they could be signed over to the shipping company. Ports could standardise handling equipment and dispense with warehouses (containers could be stacked in the rain if required). Railways and trucking companies could develop trailers to accommodate the new containers. Such was the success of the new design that very soon specialist containers were developed which conformed to the ISO standard module sizes, for example, refrigerated containers that provide temperature-controlled environments for perishable goods.

Chapter 1: Short case study 1 Copyright © 2006 Pearson Education Limited

Slack: Operations Management, 5th edition

Questions 1. What are the common features of these two examples? 2. What other examples of standardisation in transport operations can you think of?

Chapter 1: Short case study 2 Copyright © 2006 Pearson Education Limited

Slack: Operations Management, 5th edition

Short case: Swatch revolutionises watch manufacture In the early 1980s, the Swiss watch industry was nearly dead. Competition from cheap, but often high-quality, products from Far Eastern manufacturers, such as Seiko and Casio, had almost obliterated the traditional Swiss industry. Trying to protect their investments, the Swiss banks organised a merger of the two largest companies on the advice of Nicolas Hayek, now boss of Swatch’s parent company SMH, which was formed from the merger. Hayek saw the potential of a new plastic-cased watch which was already being developed inside one of the companies.

One of its major advantages was that it could be made in high volume at very low cost. The quartz mechanism was built directly into the all-plastic case using very few components, less than half the number in most other watches. Fewer components also meant that the manufacture of the watch could be fully automated. This made Swatches cheap to produce, even in Switzerland, which has one of the highest labour costs in the world. The innovative design, some creative marketing, but above all else the operation’s success at producing the watch cheaper than anyone else brought the company significant rewards. In the early 1980s, the total market share for all Swiss watches was around 25 per cent; 10 years later it had more than doubled.

The ability to offer a good watch at a low price had released the potential of the watch to become a fashion accessory. Swatch’s operations reaped the benefits of high volume, but had to cope with an everincreasing variety of product designs. Through automation and rigid standardisation of the internal mechanism of the watch, the company managed this increase in variety without crippling its costs. It is the success of the company’s operations managers in keeping their costs low (direct labour cost is less than seven per cent of the total cost of production) that has allowed Swatch to succeed. Not that everything the company has done has been successful. Some designs never caught the public imagination and some distribution and marketing mistakes were made, especially in the United States. However, continuing innovation, high quality and low cost make it much easier to overcome such problems.

Chapter 1: Short case study 3 Copyright © 2006 Pearson Education Limited

Slack: Operations Management, 5th edition

Questions 1. What do you think has been the contribution of the marketing function, the product design function and the operations function to the success of Swatch? 2. How do you think Swatch compares with most watch manufacturers?

Chapter 1: Short case study 4 Copyright © 2006 Pearson Education Limited

Slack: Operations Management, 5th edition

Short case: The Henry Ford of ophthalmology High-volume operations can be found in some surprising places – even surgery. Not all surgery conforms to our preconception of the individual ‘super-craftsperson’, aided by his or her back-up team, performing the whole operation from first incision to final stitch. Many surgical procedures are, in fact, fairly routine. However, there can be few examples of surgery being made quite as routine as in the Russian clinics of eye surgeon Svyatoslav Fyodorov.

He has been called the ‘Henry Ford of ophthalmology’, and his methods are indeed closer to the automobile assembly plant than the conventional operating theatre. The surgical procedure in which he specialises is a revolutionary treatment for myopia (shortsightedness) called radial keratotomy. In the treatment the curvature of the cornea is corrected surgically – still a controversial procedure among some in the profession, but very successful for Fyodorov. From his Moscow headquarters, he controls nine clinics throughout Russia. The source of his fame is not the treatment as such – other eye surgeons around the world perform similar procedures – but the way he organises the business of the surgery itself. Eight patients lie on moving tables arranged like the spokes of a wheel around its central axis, with only their eyes uncovered.

Six surgeons, each with his or her ‘station’, are positioned around the rim of the wheel so that they can access the patients’ eyes. After the surgeons have completed their own particular portion of the whole procedure, the wheel rotates round to take patients to the next stage of their treatment. The surgeons check to make sure that the previous stage of the operation was performed correctly and then go on to perform their own task.

Each surgeon’s activity is monitored on TV screens overhead and the surgeons talk to each other through miniature microphones and headsets. The result of this mass production approach to surgery according to Fyodorov is not only far cheaper unit costs (he and his staff are paid for each patient treated, so they are all exceptionally wealthy as a result), but also a better success rate than that obtained in conventional surgery.

Chapter 1: Short case study 5 Copyright © 2006 Pearson Education Limited

Slack: Operations Management, 5th edition

Questions 1. Compare this approach to eye surgery with a more conventional approach. 2. What do you think are the advantages and disadvantages of this approach to eye surgery?

Chapter 1: Short case study 6 Copyright © 2006 Pearson Education Limited


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